Investors interested in Banks - West stocks are likely familiar with PacWest Bancorp (PACW) and Columbia Banking (COLB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
PacWest Bancorp and Columbia Banking are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that PACW's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PACW currently has a forward P/E ratio of 10.11, while COLB has a forward P/E of 14.31. We also note that PACW has a PEG ratio of 1.01. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. COLB currently has a PEG ratio of 2.04.
Another notable valuation metric for PACW is its P/B ratio of 0.97. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, COLB has a P/B of 1.28.
These are just a few of the metrics contributing to PACW's Value grade of B and COLB's Value grade of C.
PACW has seen stronger estimate revision activity and sports more attractive valuation metrics than COLB, so it seems like value investors will conclude that PACW is the superior option right now.
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PacWest Bancorp (PACW) : Free Stock Analysis Report
Columbia Banking System, Inc. (COLB) : Free Stock Analysis Report
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